Mining companies routinely deprive African countries of huge amounts of tax revenue

A new ActionAid report reveals that mining companies routinely deprive African countries of huge amounts of tax revenue that could be used to combat poverty. from ‘Breaking the Curse: How Transparent Taxation and Fair Taxes can Turn Africa’s Mineral Wealth into Development’ is one in which African governments are deprived of millions of dollars as many contracts signed with governments remain secret, with mining companies using this secrecy to pursue aggressive tax avoidance strategies.

Mining companies routinely deprive African countries of huge amounts of tax revenue

Mining companies routinely deprive African countries of huge amounts of tax revenue that could be used to combat poverty, a new ActionAid report reveals last week (25th March).  The picture that emerges from ‘Breaking the Curse: How Transparent Taxation and Fair Taxes can Turn Africa’s Mineral Wealth into Development’ is one in which African governments are deprived of millions of dollars as many contracts signed with governments remain secret, with mining companies using this secrecy to pursue aggressive tax avoidance strategies.

The report, jointly published by ActionAid, Christian Aid, Third World Network Africa, Tax Justice Network Africa and Southern Africa Resource Watch, highlights methods mining companies use to pay as little tax as possible. These include forcing governments to grant tax subsidies and concessions by threatening to go elsewhere if they are not forthcoming and using false accounting to enable companies to artificially depress profits in countries where they operate to evade tax.


“One practical step to addressing poverty in Africa is to ensure that all multinational mining companies pay equitable amounts of tax,” said Brian Kagoro, ActionAid’s Pan African Policy Manager. “If they did, governments could fund social welfare programmes with revenue generated from taxes rather than seeking to borrow money externally. “Mining contracts and payments to governments need to be subjected to rigorous parliamentary scrutiny to improve accountability in this sector. “And we need to strengthen the capacity of national regulatory tax authorities as well as rationalise international accounting standards to ensure compliance.”

Governments across Africa are finding their negotiating capacity vis-à-vis mining companies suddenly diminished as a result of the financial crisis. Those who have already started reforming their old mining tax regimes or renegotiating mining contracts are now facing enormous pressure from companies to reverse these tax reforms in response to falling international prices.